2.8M ETH flow into accumulation wallets, exchange reserves drop amid price downturn

Ethereum’s ETH holding structure is shifting during the latest market downturn. In the past month, more than 2.8M ETH shifted to accumulation wallets, while exchanges further depleted their reserves. 

In September, more ETH kept flowing into accumulation addresses, with up to 2.8M added to the balance since late August. The balance on accumulation addresses kept going vertical, reaching close to 28.6M ETH. 

The past week saw significant additions to the balance of those addresses, with 400K ETH moved in a single day. Accumulation did not stop despite the ETH liquidation cascade, which caused the biggest deleveraging events since the spring of 2021. 

The day was also marked by another BitMine treasury purchase, adding more than 209K ETH to the reserves. 

Accumulation addresses may include ETH institutions or funds

In the past week, large-scale inflows to accumulation addresses included a day when whales bought up 1.2M ETH. The scale of buying suggests some of the accumulation addresses may belong to institutions, funds, or other strategic accumulators, making a long-term bet on Ethereum. 

Accumulation addresses also feel limited pressure to sell, as their realized price so far is below the current market price. The accumulation wallets are also known as no-sell addresses, with most dedicated to long-term holding.

Ethereum exchange reserves are still trending downward, at around 16.5M ETH. Spot exchanges only have 7.24M ETH in their known wallets. Coinbase Advanced is down to 3.2M ETH, after multiple outflows in the past month. The outflows from Coinbase Advanced moved into self-custodied wallets, cold storage, or self-controlled staking.

However, the low reserves on exchanges still allow for sudden inflows and selling pressure from whales or market-makers at the last moment. Currently, despite the accumulation and low reserves, ETH is still not feeling a strong supply crunch. 

ETH reserves are accumulated for eventual DeFi purposes, including the creation of new stablecoins. The Ethereum ecosystem remains the leader of DeFi activity, still requiring ETH for collaterals, staking, liquid staking, and other use cases. 

ETH dips to $3,900 with ongoing liquidations

The recent movements on the derivative markets offset the accumulation of ETH. The token dipped to the $3,900 range after another day of liquidations. 

ETH saw over $272M in long liquidations for the past 24 hours, though some short positions were also liquidated. Open interest fell to $24.2B, retaining the dominance of long positions. The recent volatility happened on the day of the monthly options expiry on Deribit, with a total of $22B in crypto options. 

During the latest downturn, both crowd money and smart money were cautiously bearish. The recent significant deleveraging may take weeks or months to rebuild positions, though a short squeeze is possible to just above $4,000 with newly accumulated liquidity.

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